Reddit is experiencing significant growth, achieving profitability for the first time in its 20-year history. The platform also boasts a record 97.2 million daily active users, a 47% year-over-year increase. This figure even surpassed 100 million on several occasions during the third quarter, a milestone CEO and co-founder Steve Huffman highlighted in a shareholder letter.
Reddit CEO Steve Huffman at a conference.
A Financial Turnaround
Reddit, which went public in March, announced these impressive results in its third-quarter earnings report. The company reported a $29.9 million profit, a dramatic improvement from the $575 million loss suffered in the first quarter as a public company. This positive trend continued from the second quarter, where losses were reduced to $10 million.
Driving Revenue Growth
This strong performance is attributed to a 56% year-over-year increase in ad revenue, reaching $315.1 million. “Other revenue” also contributed significantly, totaling $33.2 million, a remarkable 547% increase from the previous year. This category includes deals with Google and AI companies, allowing them to use Reddit content for AI model training.
User Engagement and Search Visibility
Huffman emphasized the platform’s strong quarter, citing new levels of user traffic, revenue growth, and profitability. He also noted that “Reddit” ranked as the sixth-most-Googled word in the U.S. this year, demonstrating the platform’s increasing role as a source of information, advice, and community. This prominence was further exemplified by the White House utilizing Reddit to disseminate critical information during recent hurricanes.
Challenges and Scrutiny
Despite this success, Reddit has faced challenges. The company drew criticism for its decision to charge for API access, impacting third-party apps and leading to some closures. Additionally, the Federal Trade Commission is scrutinizing Reddit’s sale of user-generated content for training large language models operated by companies like Google and OpenAI.
